Display omitted •Designing genetically encoded fluorescence-based analyte biosensors is not trivial.•Many current design efforts take a nature-inspired, modular approach.•Individual sensor components can be engineered separately for desired properties.•Screening of large variant libraries is often required to optimize biosensors. Biosensors that selectively report on the presence of specific small molecule analytes have applications in many fields of research, medicine and biotechnology. Here, we review recent advances and emerging approaches in the design and optimisation of genetically encoded fluorescence-based small molecule biosensors. We discuss how natural sensory proteins can be exploited to produce novel biosensors and the strategies for optimizing ligand specificity and fluorescence readout. Finally, we provide insight into high-throughput sensor optimisation and discuss the challenges that are faced when designing novel biosensors.